Friday, April 17, 2009

Century 21 v. Haberman (Cal. Ct. App. - April 17, 2009)

I'm not so sure.

Do I agree with Justice Ikola that the complaint here isn't subject to an anti-SLAPP motion? Sure I do. The first count was to recover a $200,000 loan and $14,000 in interest. That's just a routine money claim and isn't a SLAPP. The second count was for a declaration that the plaintiff doesn't have to arbitrate. I agree with Justice Ikola that this count also isn't subject to an anti-SLAPP motion. Going to court to find out whether a monetary (non-SLAPP) claim must be arbitrated does not itself constitute a SLAPP.

So I think this case could be resolved upon fairly simple -- and limited -- grounds. But Justice Ikola goes a bit beyond that, and in doing so, I think may unnecessarily make some pretty bad law.

I fully understand where he's coming from, as well as the statutory and precedential analysis he uses. It's not at all patently meritless. Justice Ikola basically reads the statute, as well as SLAPP precedent involving other "private" proceedings -- e.g., nonjudicial foreclosure -- to argue that private arbitration simply does not ential "a judicial proceeding [or judicial body], or any other official proceeding authorized by law" as required for the anti-SLAPP provisions of CCP 425.16(e) to apply. It's not a "judicial proceeding," the Court of Appeal holds, for the simple reason that it's deliberately a private nonjudicial proceeding. And, sure, there are lots of statutes in the CCP and Evidence Code about arbitrations, and about the litigation privilege applying therein, but the fact that there are statutes doesn't mean that the proceeding is "authorized by law" either. That's Justice Ikola's reasoning, and -- again -- it makes some sense.

I nonetheless think it's wrong. Both as a textual matter as well as a matter of policy. Arbitrations are more than merely private contracts. They're designed and encouraged as an alternative to formal litigation, and accordingly seem to me to be something properly protected under the anti-SLAPP statute. Remember that I agree the present case isn't protected, since it merely involves declaratory relief about an underlying money dispute, but I think that -- properly interpreted -- arbitrations should indeed be "judicial proceedings or any other official proceeding authorized by law."

Let me give the policy reason first, and then the textual one. Recourse to arbitration should be protected by the anti-SLAPP statute for the same reasons that recourse to court is protected. We prefer such relief to self-help. We also recognize that parties can potentially use arbitration to intimidate and drag people through the mud just like they can judicial lawsuits. Indeed, often, the out-of-pocket cost of arbitration exceeds the cost of judicial remedies. For the same reason we apply the litigation privilege to arbitrations, even though the latter isn't formally a "court," so too should the anti-SLAPP provisions apply to recourse to arbitration. To take an easy point. A statement in court is protected by the anti-SLAPP provisions. But under Justice Ikola's holding, a statement in an arbitration won't be protected, since it's not a statement in a "judicial proceeding or any other official proceeding authorized by law." I think that's a disadvantageous view of the law, and something that would be avoided if the statute in fact covered arbitrations.

And, as a textual matter, I think it does. Why is an arbitration a "judicial proceeding or any other official proceeding authorized by law?" The best argument, I think, is that arbitrations are "authorized by law" because they are not only permitted by the courts, but are affirmatively compelled. The easiest example is when a party files a lawsuit in court (or petition to compel arbitration) and the court affirmatively obligates the parties to go to arbitration. Surely the resulting proceeding is "authorized by law," right? It's not only "authorized" by law, but affirmatively coerced.

Moreover, even proceedings initiated via arbitration are forced to be there because, as a legal matter, the state refuses to allow judicial recourse in the face of a valid arbitration agreement. In my view, when the law affirmatively compels you do enter into a certain dispute resolution proceeding, the resulting proceeding is at least "authorized by law" (and probably more), and hence is covered by the anti-SLAPP statute. So just like a court-ordered mediation (or judicial arbitration) would be clearly covered by the anti-SLAPP statute, so too are private arbitrations. When you're legally compelled to enter into such proceedings, they're covered, at least for your run-of-the-mill arbitration in the current legal milieu.

So while I understand where Justice Ikola comes from, and again agree with the disposition of this particular case, I would disagree with his foundational premise. A premise that I think creates law that is harmful to a fair degree, and unnecessarily so. Both the text of the anti-SLAPP statute and its purpose, I believe, compel a contrary conclusion.

Ponder that as we head into a warm and wonderful weekend. Enjoy!